Australia needs a fresh debate on the future of tax breaks handed to property owners, Chief Minister Andrew Barr has said.
Subscribe now for unlimited access.
Mr Barr said he thought limits to negative gearing rules would help make the property market more accessible, while acknowledging change was politically unlikely.
"I am in favour of some further changes in relation to tax settings in the housing market. The ones that are within my control, particularly, are stamp duty," Mr Barr said.
While the federal government has the power to change negative gearing rules, the ACT is halfway through a long-term phase out of stamp duty on property transactions.
"I think that's going to mean more falls on the territory in relation to stamp duty for the stamp duty reform," Mr Barr said of the need to change property tax settings.
Any change to stamp duty would be included in next month's ACT budget, he said.
Negative gearing allows property owners to claim a tax deduction for loss associated with owning an investment property.
The Chief Minister on Wednesday said it was worth considering changes to the system that would limit the number of properties an owner could negatively gear, rather than abandoning the system completely.
Federal Labor abandoned its policy of changing negative gearing and capital gains taxes in 2021, after unsuccessfully taking it to the 2019 election under then party leader Bill Shorten.
Mr Barr acknowledged changes to negative gearing were politically difficult and unlikely to be considered by the federal Labor government, which won the 2022 election having abandoned its earlier policies.
The ACT claims its tax changes, planned out over 20 years, will be revenue neutral, replacing stamp duty revenue with general rates, levied on the unimproved value of land.
But stamp duty revenue has continued to climb in the ACT budget, despite the stamp duty rate applied to transactions falling.
Modelling released in 2022 by Victoria University found that by removing stamp duty while applying rates on land may reduce the value of the property.
This would encourage more turnover in the property market, as buyers are not faced with steep transaction fees, the modelling indicated.
The ACT government has a little over eight years to deliver the 20-year plan to abolish stamp duty.
